Hong Kong seeks info on MGM Resorts International (MGM)

May 2, 2011 8:50 PM

Last year, when Wynn Resorts Ltd. (WYNN) and Las Vegas Sands Corp. (LVS) sought extra cash by spinning off a portion of their Asian holdings into separately-traded shares on the Hong Kong Stock Exchange (HKSE), the financial maneuvers seemed to move along rather smoothly.

Unfortunately, that has not been the case for MGM Resorts International (MGM).

After short delays while the company restructured its Macau ownership position with partner Pansy Ho, the company submitted its application for the HKSE listing.

Last week, the exchange’s listing committee notified the company it needed to provide additional information regarding the recent changes in the shareholder structure of the joint Macau venture.

Following media reports regarding the listing committee’s request, MGM issued the following statement:

"MGM China continues to work closely with the HKSE to address all remaining items in order to achieve a prompt listing of its shares on the HKSE. The timing or terms or any such listing have not yet been determined, and there is no assurance as to whether MGM China will ultimately proceed with the listing, or whether the application will be approved by the HKSE."

In making the shares available to Hong Kong investors, MGM hopes to generate as much as $1 billion. Of that amount, $300 million would go to partner Pansy Ho who was reducing her ownership share from 50 percent to 29 percent. Ho then plans to invest the $300 million in MGM notes.

The remainder of the proceeds would go toward MGM’s financial needs. The company still struggles with some $12 billion of debt, an amount that has some analysts questioning the company’s value.

Joel Simkins, chief gaming analyst at Credit Suisse, suggested last week "investors should get up from the table, stick their chips in their pockets and walk away from MGM Resorts International," according to an article in Barron’s.

The analyst said he believes the Las Vegas Strip’s overall recovery is too slow to boost MGM shares while any financial benefits from the Hong Kong IPO have been priced into the current share price.